June 6, 2016

It’s another week, another chapter in the Gannett-Tribune Publishing (Tronc) takeover battle.

At the end of last week, Tribune Publishing held its annual meeting, elected a slate of directors friendly to Chairman Michael Ferro and announced its impending corporate name change to Tronc, putting the ball back in Gannett’s court. It could respond by dropping its 100 percent premium bid of $15 a share and moving on, a move it’s apparently considering seriously. That would not preclude coming back with a new bid sometime in the future.

Or, it could keep its current offer on the table for the time being, as CNBC reported this morning. That would allow a window to see whether a shareholder suit, charging Ferro with breach of fiduciary duty, has legs.

Or it could increase its bid, as dissident investors Oaktree Capital and Towle & Co. have said in public filings Gannett is probably willing to do.

Tribune Publishing shares were up 17.7 percent for the day closing at just over $13. I take that as Wall Street giving credence to the CNBC report and the possibility of a higher bid — not a signal of confidence in the Tronc rebranding and Ferro’s plans for a “content monetization machine” using artificial intelligence.

Tribune Publishing today released the vote totals from Thursday’s meeting. It appears both sides were right in dueling claims last week. All the directors received majority approval and were elected, as Tribune said. However, as Gannett claimed, about half of shareholders unaffiliated with management withheld their votes, a higher percentage declining to vote for Ferro, CEO Justin Dearborn and former chairman Eddy Hartenstein.

That indicates that many independent shareholders don’t agree with spurning Gannett’s bid, don’t like the Tronc name and strategy or both. Conversely, Ferro gives every indication that he doesn’t care.

Late Friday afternoon, Oaktree reiterated its objections to management’s conduct, saying it would be willing to sell its shares for the $15 price on the table.

That may be a debating point. Ferro briefly offered to sell Oaktree’s stake to a third party, presumably Dr. Patrick Soon-Shiong, but ended up issuing new shares to the billionaire investor instead. I don’t believe Ferro or Soon-Shiong could now buy Oaktree’s 13 percent stake without exceeding limits they agreed to earlier on their share of ownership.

Also late Friday, a law firm announced that it was soliciting unhappy shareholders for a suit along the same lines as the one filed June 1 by Capital Structures Realty Advisers. Depending on the response, the law firm could file a suit of its own (and get some of the action if the two were consolidated).

And about that name. Not a winner in the court of snarky Twitter opinion, and the Nickelodeon typography logo is a little funky as well. But those with long memories may recall that Standard Oil was ridiculed in 1972, when it rechristened the company Exxon (a made up non-word). After awhile people got used to it.

The real onus on Ferro and his collaborators is to get past the vague buzzwords and define in detail what the Tronc product is supposed to be — then to create it and demonstrate it can be the cornerstone of a digital revenue strategy.

The latter, particularly, is going to take a lot longer than this week.

Support high-integrity, independent journalism that serves democracy. Make a gift to Poynter today. The Poynter Institute is a nonpartisan, nonprofit organization, and your gift helps us make good journalism better.
Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

More News

Back to News